How much will it cost to go to university?

Anyone planning to invest in a university degree must first ask what is the value of higher education?  Its value is relatively subjective and therefore difficult to answer, but it is directly related to cost.

There are several factors that shape price, primarily supply and demand.  Ifdemand increases and there is a shortage of supply, price increase.  Higher education has been significantly oversubscribed in recent years, but that reveals nothing about the quality of the applicants.  Universities are in fierce competition to attract the most talented students, of which there is a shortage.

Another consideration is that of Veblen goods; commodities whose demand increases as the price rises.  For example a designer sweater may essentially identical to a high street equivalent, but its inflated price increases its desirability by inferring status.

Universities will also be incentivised to charge more by the government.  Leading universities have arbitrary Widening Participation (WP) targets upon which some of their funding is contingent.  In its simplest terms, Widening Participation is attracting high achieving students from less advantaged backgrounds.
Any university that charges above the minimum has to commit to spend a proportion of this additional fee income on WP activities.  Charging higher fees will not only bring in more money directly but potentially unlock the additional funding that is linked to WP.

How much will it cost to go to university?  The short answer is more than £6,000.  The University and College Union predicts that every university will have to charge at least £6,863 per year to maintain funding levels.

This suggest that most the Million+ universities will charge somewhere between six and seven thousand, depending on how difficult they are finding it to attract quality applicants.  These universities rarely struggle to meet WP targets, so that consideration is unlikely to shape their price.  But they will have to charge less than the Russell and 1994 Groups to remain competitive.

Oxford and Cambridge have already set their fees at the maximum £9,000.  The rationale for this is simple.  By charging the full fee Oxbridge is inferring that their ‘product’ is of the highest quality.  Oxbridge rarely struggles to attract high quality applicants, so there is a clear lack of supply that is driving demand which is in turn driving price.

The Russell Group has suggested that they will have to charge at least £7000 to maintain current funding levels.  My prediction is that both the Russell and 1994 Groups of universities will charge approximately £8,000, moving all of the top universities towards the higher end of the fee bracket.  These universities will price themselves relative to Oxbridge; charging significantly less could suggest a lack of quality.

Universities can’t discuss prices with each other, this is anti-competitive.  If direct competitors charge less than their rivals it could affect the perceived value of their degrees; erring on the side of caution may inflate the price.  Under the current funding arrangement every single university charges the highest fee possible, the one university that bucked this trend found itself in financial difficulty.

The coalition government expects most universities to charge £6,000 per year.  Sadly all the evidence suggests that, despite the rhetoric, this is highly unlikely.  One suspects the fee debate has a long way to run yet.

Student protests: The challenges ahead

The recent student protests have provided positive evidence that political apathy in the young people is not as prevalent as many assumed, though it remains to be seen if this political awareness stretches beyond mere self interest.  If recent British history teaches us anything it is that peaceful protest does not work; Gleneagles, the Stop the War Coalition and previous marches against fees have left little or no legacy.  The poll tax riots were the last protests to get violent; not only were they successful but they proved the straw that broke the camels back for the Conservative cabinet who promptly consigned Margaret Thatcher’s premiership to the history books.  Other recent protests taking direct action such as those at Kingsnorth provide an indication on the most effective form of action.

Although participating in vandalism and or violence during a protest is neither a guarantee that your aims will be met or the best course of action, it does at least garner you much public attention.  The vandalism at the recent student protests in London and around the UK hint at a wider disenchantment; if these protests are leave any lasting impression this wider disillusionment must be harnessed. To do this, three challenges need to be addressed.

The first obstacle is the National Union of Students itself; an organisation dominated by Labour party supporters and members has predictably positioned itself in direct opposition to the coalition, opposition for the sake of opposition and its protests are also woefully late, by more than ten years.  The introduction of fees by the Labour party in 1999 established the principle that those that benefit directly from their education should pay for (at least, some of) it.  The Browne review was commissioned by Labour who were committed to carrying out its recommendations; by doing the same the coalition is following Labours policies through to their logical conclusion.  Though they have ignored some of Browne’s recommendations and the financial crisis has probably accelerated the timetable, it’s still essentially Labour party policy; hence the voice of Labour is conspicuous by its absence in the fees debate.  By placing the blame solely on the coalition the NUS leaves itself open to accusations of partisanship and lacking credibility, protesting because it suits the partisan agenda of its executive rather than the interests of members.  To this end the NUS has already been circumvented by the ‘grass roots’ protesters, forcing its president into a public apology in an attempt to save his own skin and remain relevant.   The ‘demolition coalition’ strategy is also a non-starter; it intends to bring down the Liberal Democrats with a policy that they have yet to introduce into parliament and probably won’t do for two years at least.  The ‘demolition’ message is likely to have little resonance by then.

Secondly, the NUS and fellow protest groups need a credible and coherent message.  When the coalition claims the new system will be more progressive, that’s because it is more progressive than the previous system introduced by Labour.  It’s not as progressive as abolishing fees altogether, but it’s far too late for that.  uts to the Educational Maintenance Allowance are regressive and they are recent; this should form a more significant focus of their message.  Ideally protest should also be directed at the commodification of higher education, the belief that its sole purpose is to generate a greater GDP, but the risk is that it would ring hollow.  Tens of thousands of students embrace the cheap credit and commodities that the globalised, modern capitalist society offers, whether to buy Iphones, Uggs or cheap clothing from Primark.  You can’t argue against the former whilst indulging in the latter, that’s classic double think.  This narrow focus on university fees and false claims that poorer students will be priced out of higher education (they may be put off, but perception is not reality) undermines credibility and leaves them open to accusations of merely protesting against the increased costs for middle class students – mere self interest.

This leads us to the third challenge and an opportunity.  The protests seem to encapsulate anger and frustration at the coalitions cuts programme as a whole, but this is currently only being expressed through immediate student concerns such as EMA and university fees.  The message needs to be explicitly broadened, the trade unions and third sector organisations brought into the fold.  For example, Shelter has highlighted the regressive nature of housing benefit cuts and this ties in to a greater sense of anger that the coalition does not have a mandate to enact sweeping cuts that will leave thousands worse off.  A single unified message from a coalition of unions and charities would be much more persuasive; the Big Society in action, perhaps.  

This is easier said than done, but it looks as though it may be beginning to happen.  If participation becomes more inclusive and a coherent, non-partisan narrative is formed then this nascent movement may begin to resonate with the wider public and actually affect some meaningful change.  Otherwise the protests will be remembered as a rite of passage for the latest generation of students much like the Stop the War was for the previous; I cared, I was there, but nothing really changed.